EUR 850.00 For Business Accounts Only

Morningstar | Strong Turnaround Still in Place for Aviva

Aviva is a midmarket insurer that has historically had its fair share of problems. It has been overleveraged and caught with substandard processes and controls. Largely an undifferentiated composite insurer, it missed opportunities to expand its asset-management arm and establish a moat. However, the business is now on a stronger financial footing, and there is operational momentum in asset management and digital.Going digital is widely broadcast by multiline insurers, but Aviva and the United Kingdom are better placed to benefit. The Retail Distribution Review and U.K. pension reforms changed the U.K. accumulation landscape as Independent Financial Advisor numbers dropped to 22,000, a 55% decline on 2012. This led to a rise in accumulation through platforms as Aviva picked up additional orphaned customers. Platforms are offered via two channels: retail and corporate. Aviva’s retail platform is fairly small, but the business has the largest auto-enrollment offering in the United Kingdom.The second addressable area in digital is quality and the control environment. Aviva has had a poor record on process controls and customer service, which was exemplified by the 2015 technical errors and 2007-12 fixed-income trade allocation failings. Digital is helping to resolve these issues. In customer service, the reliance on digital lowers the risk of incorrect or incomplete advice. Also, improved systems and controls are helping Aviva find its way into the institutional client environment. For fund management, Aviva has had limited success. Beyond the control failings, a limited focus and lack of leadership and management stability led to declining investment performance. The unit has been largely managing captive insurance assets to the tune of around 80% of assets under management, but Aviva Investors is now better placed to attract accumulation and decumulation retail and institutional business.